Why All of Us May Have to Pay for B of A's $5 Debit Card Fee

×

Last week, Bank of America (BAC) ignited a firestorm of controversy in choosing to start charging its customers $5 a month to use their debit cards. Now, an angry consumer group has called for a federal investigation over the practice.

Is the move overkill or a smart response to what could be a budding disaster for the bank -- and taxpayers?

Yesterday, Consumers Union, a division of Consumer Reports that does public policy and advocacy work, asked Congress and financial regulators to look at the new fee. The group cited bad timing in forcing cash-strapped customers to pony up $60 a year in extra fees. In addition, it pointed to the inevitable loss of customers resulting from the fee as endangering the bank's delicate recovery from the financial crisis three years ago.

Balk or Bail?

Bank fees have gotten a lot of attention lately, and with good reason. Having to spend dozens or even hundreds of dollars in such fees over the course of a year can make a huge difference in your personal finances.

The easiest thing to do when your bank imposes a fee you don't like is simply not to pay it -- either by changing what you do or finding another bank without the fee.

The problem, though, is that with federal bailouts of banks such as Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS), and B of A, everyone now has a stake in seeing the banks survive.

It's Our Bank, Too

Ordinarily, when dumb moves put a company out of business, no one suffers but its shareholders. But if B of A alienates its customers so badly that it ends up requiring yet more assistance from taxpayers, everyone stands to lose. No one wants to see that happen.

No matter what happens on this particular issue, you have to be prepared to see banks try to raise income in countless new ways. Now more than ever, choosing a financially secure bank or credit union that treats its customers right will pay off with big dividends in cost savings.

Motley Fool contributor Dan Caplinger believes that voting with your feet is more powerful than siccing the feds on someone. You can follow him on Twitter here. He doesn't own shares of the stocks mentioned in this article. The Motley Fool owns shares of Bank of America, Wells Fargo, and Citigroup, and has created a ratio put spread position on Wells Fargo.


Increase your money and finance knowledge from home

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Goal Setting

Want to succeed? Then you need goals!

View Course »

Add a Comment

*0 / 3000 Character Maximum

12 Comments

Filter by:
Joe Reguy

This article is ridiculous. BOA has made it abundantly clear, after buying Wells Fargo with taxpayer money and THEN paying the loan back, they do not want help. Let them flounder. Someone will step up and take their place.

October 07 2011 at 1:01 PM Report abuse rate up rate down Reply
Mark Johnson

The Durbin Amendment is solely responsible for the wave of new bank fees. BofA and all other big banks are looking for ways to make up for lost revenues and, frankly, I can't blame them, even as I don't enjoy paying higher fees.

It's been abundantly clear ever since the debit interchange limit was first proposed that it was ultimately going to hurt consumers in the form of higher fees and that is precisely what is currently happening. http://blog.unibulmerchantservices.com/banks-discontinue-debit-rewards-programs

October 05 2011 at 7:01 PM Report abuse +1 rate up rate down Reply
Ron

BYE BYE B OF A!!!

October 05 2011 at 6:47 PM Report abuse +1 rate up rate down Reply
daply

I will continue posting this until someone in our current government gets it. This is actually happenning today, people are losing property and voice in government. If one more cent of my tax money is used to bail out banks or some other failed business...

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
— Thomas Jefferson

October 05 2011 at 3:37 PM Report abuse +1 rate up rate down Reply
totyba

More bank bailouts coming? screw B. of A.- they could care less about anyone but themselves. If we let our politicians give the TBTF banks anymore public money and do nothing then we deserve what we get.
Don't let party affliation govern your thoughts- left or right really doesn't matter anymore- just their actions.
Find a small local bank or credit union and get away from these TBTF crap.
Probably preaching to the chior as most people read this are more intelligent than the sheeple who don't know what is really happening.

October 05 2011 at 3:28 PM Report abuse rate up rate down Reply
tanddhoob

Do what should have been done with the crooked banks in the first place: let it die. If anybody has to be saved, pay off the depositors and close its doors.

October 05 2011 at 3:28 PM Report abuse rate up rate down Reply
cctgos

Gut the TOP bosses first - show the workers that they are needed and the stuffed shirts are not.

Keep laying off workers and then you have no one to use your bank or buy your products
Then what with no income they don't pay taxes so no bailouts.

Trim a tree only from the bottom and it will fall or fail as the case may be.

October 05 2011 at 3:12 PM Report abuse rate up rate down Reply
Hi Hoop

Sadly, the real culprit is the Dem Senator Durban whose amendment created the problem in the first place.

October 05 2011 at 2:42 PM Report abuse +3 rate up rate down Reply
1 reply to Hi Hoop's comment
russeolson

Actually it is the greedy CEO's for the Banks that got excessive pay packages while running the economy into the ground and the Republicans in Congress that are fighting any regulations of the Financial SEctor.

October 05 2011 at 2:55 PM Report abuse -2 rate up rate down Reply
George

Couldn't agree more, Bill. What kind of reasoning allows bankers to screw up the entire world with their actions, then demand more fees to insure they will get their bonuses. People in govt are to blame as well. They are breaking the rules to accomodate these jerks.

October 05 2011 at 2:21 PM Report abuse +2 rate up rate down Reply
Bill

If they were truly interested in raising funds for the banks solvency they would gut the salaries of these overpaid and underworked idiots who are running the show. The only thing worse and more stupid than those guys are the professors at our colleges who believe we need to pay these idiots in order to get the best available help there is. If this is the best we can do were doomed .

October 05 2011 at 12:35 PM Report abuse +2 rate up rate down Reply